Forensic officers inspect the scene after an explosion close to Taksim Square in Istanbul, Turkey (AP)

A suicide bomber has blown himself up beside a police vehicle in a major Istanbul square near tourist hotels and a bus terminal, wounding 32 people, including 15 policemen.

The attack in Taksim Square, followed by police gunfire and sent hundreds of panicked people racing for cover, coincided with the possible end of a unilateral cease-fire by Kurdish rebels, but there was no immediate claim of responsibility.

Turkey, a Nato ally that has deployed troops in a non-combat role in Afghanistan, is also home to cells of radical leftists and Islamic militants.

Istanbul police chief Huseyin Capkin said the bomber tried but failed to get into a parked police van and detonated the bomb just outside the vehicle, blowing himself to pieces.

Riot police are routinely stationed at Taksim where Istanbul Governor Huseyin Avni Mutlu said at least 32 people, including 15 police officers, were injured, at least two of them seriously.

After the blast investigators at the scene found and defused a package of plastic explosives that could have been detonated with the push of a button.

The attack happened as Istanbul prepared to hold Republic Day parades to mark the 1923 founding of Turkey. The celebrations were originally planned for Friday, but were delayed due to heavy rain.

Taksim Square, a transport hub that is a major stop on the city's underground train network and close to the Hyatt, Ritz-Carlton and other major hotels, was festooned with red and white Turkish flags.

Kurdish rebels fighting for autonomy in Turkey's mainly Kurdish south-east have a history of suicide bombings in Turkey and their unilateral cease-fire was scheduled to expire at the end of October.

The state has held secretive talks with the jailed leader of the rebel Kurdistan Workers' Party, or PKK, in an effort to end the conflict. But an ongoing trial of more than 150 Kurds, including a dozen elected mayors, on charges of rebel links is a sign of the deep reserves of mistrust between authorities and the ethnic minority.